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Auto enrolment in eight simple steps

Auto enrolment can seem complicated – especially if you’re new to the world of workplace pensions. But it doesn’t need to be a challenge. We’ve created this simple eight-step guide to help you navigate auto enrolment, explaining what you need to do and when, from setting up the scheme to your duties start date and beyond.

Contents

Step one: Get ready

When? As soon as possible.

If you’re a new employer, your workplace pension needs to start on the same date as your first employment contract. You’ll need to have your scheme in place on that date. You’ll also need to assess your workforce to see who you need to enrol into the scheme.

As soon as you know you’re going to have auto enrolment duties, you can nominate a contact with the Pensions Regulator. They will then send you emails to guide you in meeting your duties on time.

Step two: Set up your workplace pension scheme

As part of preparing for your auto enrolment duties, you’ll need to make some important decisions and apply for your workplace pension scheme. You’ll need to think about:

How much you’ll contribute

Whether your payroll provider will help you with auto enrolment

Who’ll run your scheme day to day

You’ll also need to get a quote and apply for your company pension at this stage.

When you choose your payroll software, think about what you want it to do for you. To be compliant with auto enrolment legislation, it needs to be able to assess your workforce, calculate contributions, send communications to your employees and keep records. Having software with the functionality to complete all of these tasks will save you a lot of time in the long run.

Assess your workforce

To do this, you’ll need to be certain how much each member of staff earns and how old they are. The table below shows the three different categories your employees might fall into, and what your responsibilities are for each. The details shown are for the Tax Year 2019/2020.

Annual salary

Age

16 to 21

22 to state pension age

State pension age to 74

£6,136 and below

Entitled workerMust be enrolled if they ask. You’re not obliged to contribute to their pension pot, but you can if you would like to.

Over £6,136 but no more than £10,000

Non-eligible jobholderMust be enrolled if they ask, and you must contribute to their pension pot.

£10,000 and over

Non-eligible jobholder

Eligible jobholderMust be auto-enrolled, and you must contribute to their pension pot.

Non-eligible jobholder

Using postponement

You can put off assessing some or all of your workforce for a period of up to three months. This is known as postponement.

Your duties start date doesn’t change if you use postponement. It simply means you’re choosing a slightly later date to assess their age or earnings. You might choose to use postponement if:

You have staff on temporary contracts

You have staff whose earnings fluctuate

You require new starters to pass a probationary period – this must be no longer than three months

You’d like to avoid having to calculate and pay pension contributions for part of a pay period

If you opt to use postponement, you’ll need to let your staff know and tell them how it will affect them.

Step four: Enrol staff onto your scheme

When? On your duties start date – or up to three months later if you’re using postponement.

Once you know which auto enrolment defintion each member of your workforce falls into, it’s time to enrol all eligible employees into your pension scheme.

What to do

Making contributions

What to do

Any employees that you assessed as being eligible jobholders will need to be auto-enrolled into your workplace pension – and with Aviva, this step is easy. All you need to do is upload a file using our online scheme management system, and that’s all there is to it. We’ll then enrol those employees into your pension scheme and send you a welcome pack.

Not sure how to do it? We’ll provide full support to show you how to do this after you’ve applied to set up your scheme.

Employees assessed as non-eligible jobholders or entitled workers don’t have to be auto-enrolled, but they can ask to join your scheme. You’ll need to write to them to explain this within six weeks of your duties start date. (See step five for more information.)

Making contributions

Every time you pay your staff, you’ll need to make contributions into the scheme for any eligible and non-eligible jobholders who are members of it. In most cases, your employees themselves will also have to contribute. You’ll also need to make sure that any contributions you've agreed to make for entitled workers or any other employees covered by contractual joining are paid.

You’ll need to work out how much both you and your employees need to contribute, then send this information to us using our online scheme management system. Again, we’ll provide full support and training to show you how to do this. If you use payroll software, it might calculate the correct contribution amounts for you.

Step five: Write to your staff

Once you’ve assessed your staff, you’re required by law to write to them each individually to explain how auto enrolment applies to them and provide details of your chosen workplace pension scheme.

You can do this by letter or email. If you use our workplace pension, you need to have done this before you send us your joiner information. This is important because it affects the date on which the opt-out window starts.

Your payroll provider might offer software that can produce this communication for you.

Step six: Declare your compliance

When? Within five months of your duties start date.

You must have completed a declaration of compliance form on The Pensions Regulator’s website no later than five months after your duties start date. This will let the regulator know how you’ve met your legal duties.

You could be fined if you don’t complete the declaration on time, or the information you submit is incorrect.

For more information, visit The Pensions Regulator where you can view a checklist of all the information you need to hand, and where you can find them.

Step seven: Perform your regular duties

Once your auto enrolment duties have started, they don’t stop. In fact, you’ll need to go through steps three to six for as long as you continue to employ people. You’ll need to:

Assess your staff (every pay period)

Every time you pay an employee who you haven’t had to auto enrol before (including new staff), you’ll need to assess them – just like you did on your duties start date. If any employees are now classed as eligible jobholders, you’ll then need to either auto enrol them into your scheme or use postponement for them.

Deal with employees who opt out of your scheme

If any of your staff who’ve been auto enrolled onto your scheme choose to leave it within one month of being enrolled, this is known as opting out.

Within one month of their request, you’ll need to remove them from your scheme, stop taking contributions from their pay, and arrange a full refund of what they’ve paid to date. If they ask to leave the scheme after this date then any payments already made will remain in the pension plan.

Making pension contributions

Every time you pay your staff, you’ll need to calculate how much to contribute for any eligible and non-eligible workers who are in your scheme.

Keep records - ongoing

The names and addresses of those you’ve enrolled onto your pension scheme

Records showing when money was paid into your pension scheme

Records of any requests to join or leave your pension scheme

Your pension scheme reference number

You’re required to record this information by law, and you must keep these records for six years. Requests to leave the pension scheme only need to be kept for four years.

Re-certify – at least every 18 months

If you’re calculating your pension contributions based on something other than qualifying earnings, you’ll need to complete a certificate at least every 18 months. This is to tell The Pensions Regulator that you’re paying at least the minimum contribution levels required by law,

Automatic re-enrolment – every three years

Around each third anniversary of your last duties start date, you’ll need to repeat some of the duties you performed on it. This is known as automatic re-enrolment. In essence, it’s when you have to make sure any eligible jobholder who has previously opted out of your scheme is put back onto it.

Your default re-enrolment date is your staging or duties start date plus three years. You can choose a date three months either side of the default date as your re-enrolment date. Once your chosen re-enrolment date arrives, you’ll need to re-assess all of your affected employees and re-enrol the eligible jobholders within six weeks. The ability to set this date replaces postponement.